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efforts to collect funds, the Administration can only show a balance in hand of some 5,000,000 taels, and it is doubtful whether more than 3,000,000 taels are at present available for the construction of the line. As no balance-sheet has been issued since the 13th January last, the public are quite in the dark as to the exact state of the railway's finances. Moreover, the Administration have, by their stringent and indis- criminate imposition of the rent tax, rendered the railway extremely unpopular among the agricultural population of the province. Realizing that matters canuot continue as they are at present if the railway is ever to become an accomplished fact, and possibly not unwilling to shift the responsibility for the carrying out of this great undertaking from their own shoulders to those of the gentry and merchants, the Provincial Government have for some months past been negotiating with the latter's representatives for a reconstruction of the Railway Administration, and one of the last official acts of the Viceroy Hsi Liang was to approve and submit to Peking a scheme whereby the construction of the railway is placed in the hands of a commercial Company, and official control is, at any rate nominally, almost entirely eliminated. I have the honour to forward copy and translation of the new Regulations, which have not, I should mention, pending receipt of the Imperial sanction, been issued to the public.
These Regulations, for which Mr. Hu Chun, the official representative of the Szechuan gentry, is said to be chiefly responsible, virtually place the control of the Company's finances and works in the hands of a Board of Directors elected by the shareholders. The Government, however, retain the right of appointment to the important posts of President and Vice-President, and the Viceroy of Szechuan has a general right of supervision over the Company's affairs. Mr. Hu Chun will, I understand, be appointed the first President.
The rate of interest on the 50-tacl shares is raised from 4 to 6 per cent. per annum, and for the convenience of small subscribers part shares, costing 5 taels each, are to be issued. By the former Regulations rent taxes were to be collected until the completion of the line. Clause 10 of the new Regulations states that the tax will cease as soon as a sum of 20,000,000 taels has been subscribed in this manner. The royalty of 30 per cent, payable to the Government has been reduced to 5 per cent.. bonuses to employés raised from 5 to 15 per cent., and the proportion to be divided among the shareholders increased from 60 to 70 per cent. of the net profits.
Clause 47 provides for a Chinese engineer-in-chief, who will probably he Mr. Hu Tung Chiao, at present engaged on a detailed survey of the line. It is difficult to believe that Mr. Hu Chun, who has had opportunities of seeing for himself the great trunk lines of the United States and Canada, can seriously think of intrusting the chief management of this enterprise to a gentleman who, however gifted and capable he may be, has only had eight years' experience in a subordinate position on American railroads, and one may hope that when the Company is ready to commence the construction of the line the Directors will be wise enough to see the necessity of availing themselves of the services of properly qualified European engineers. I have, as opportunity offered, impressed this point on Mr. Hu Chun and the Viceroy.
Clause 51 states that tenders will be invited for the supply of materials, piecework, and labour. I take it for granted that, as regards the first item, foreign firms will be allowed to compete. It appears that Mr. W. J. Davey (referred to in my Intelligence Report for March quarter, p. 18) has been in communication with the Intelligence Branch of the Board of Trade on this subject, and that he has offered to act as the agent of British manufacturers of railway material. I recently received a letter from the Principal of the Intelligence Branch inquiring as to Mr. Davey's status and reputation, and I was obliged to reply that I did not consider Mr. Davey a suitable person for the purpose. However, at the Principal's suggestion, I handed to Mr. Davey the list of British firms dealing in locomotives, rails, and rolling-stock, inclosed in the former's letter to me, and suggested that he might write to the firms in question explaining his position and placing his services at their disposal. At the same time I informed the Principal that if the firms mentioned cared to send me illustrated catalogues and price-lists of railway material I would, if possible, bring these to the notice of the Chinese authorities. I added that I did not think that any firms who had not their own representatives in China had much chance of securing orders.
I have, &c. (Signed) H. H. FOX.
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Note. In the supply of materials for the line the Hanyang Works will probably have preference, as I understand that it has the promise of supplying rails, &c., for all lines in China so far as it can meet their demands.
E. H. FRASER.
Hankow, May 24, 1907.
(Signed)
Inclosure 2 in No. 1.
Supplementary Regulations of the Szechuan Province Ch'uan-Han Railway Commercial Company (Limited).
(Translation.)
ARTICLE 1.--General Rules.
CLAUSE 1. The Viceroy of Szechuan has memorialized the Throne, begging for Imperial sanction to the formation of a Company in accordance with the provisions of the Commercial Code, this Company to be registered at the Board of Commerce in the name of the "Szechuan Province Chuan-Han Railway Commercial Company (Limited)," and to have an official seal issued by the said Board.
All matters of
grave importance affecting the interests of the Company will be submitted to the Viceroy for settlement.
Clause 2. The Company's railway system will include lines from Chengtu to Chungking, and from Chengtu to Ichang in Hupei viâ Wanhsien. The Imperial sanction has been given to an arrangement whereby the section of the line above lehang in the jurisdiction of the Province of Hupei will be constructed by Szechuan. As soon as these sections have The whole system is divided into three sections. severally been surveyed, construction will commence.
Clause 3. It is the Company's intention to build this railway with Chinese capital, subscribed in whole or part shares by Chinese only. The Board of Commerce have been requested to notify the Board of Foreign Affairs that no shares may be taken up by foreigners.
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Clause 4. The Company estimate the capital they will require at over 50,000,000 taels. They propose in the first instance to raise 15,000,000 taels as a working capital; the balance will be raised as required when the railway engineers have, after detailed surveys, estimated the total cost of the line.
Clause 5. The bead office of the Company will be established in the capital of Szechuan; a sub-office will be opened at Ichang, and at Peking, Shanghae, Hankow, and the various towns in Szechuan it is proposed to open offices for the sale of shares. Further, the Company propose to open as required offices along the lines of construction.
Clause 6. The establishment of railway banks in all the principal trading marts to serve as centres for share transactions and guarantees for the payment of interest will be proceeded with as soon as the matter has been laid before the general meeting of shareholders.
ARTICLE 2.-Shares.
Clause 7. The Company's capital will be raised in two ways: first, by ordinary shares; secondly, by rent tax shares. The business of obtaining subscriptions to As regards rent shares, ordinary shares will be attended to by the Company itself.
the Company will petition the Viceroy to instruct the local officials, in consultatoin with the Company's Directors, to make arrangements for their collection in accordance with the special Rent Share Regulations. All sums received on account of rent tax will be handed over to the head office.
Clause 8. A whole share shall cost 50 facls, a part share 5 taels.
Clause 9. As the income derived from the rent tax will depend on the amount of When produce taxed, it is impossible to fix beforehand the amount thus obtained. the sums paid on account of rent tax amount to 50 taels, the subscriber will be entitled to a whole ordinary share; for a sum of 5 taels he will receive a part share.
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